Continental Resources Applies To Swap U.S. Crude Oil Abroad

Posted by Joseph R. Fonseca
Saturday, June 07, 2014

Continental Resources , the largest leaseholder in the booming North Dakota oil fields, recently applied for a U.S. license to swap crude oil abroad in an attempt to get around the country's 40-year ban on exports, a spokeswoman confirmed on Friday.

"The pending license is to further demonstrate the need for a free market for crude, just like refined products already have," the spokeswoman said, without specifying when Continental made the application.

Continental applied for the license through the Department of Commerce's Bureau of Industry and Security, which did not comment on the matter.

The United States may soon pass Russia and Saudi Arabia to become the world's top oil producer thanks to hydraulic fracturing, or fracking, and other modern drilling techniques.

That has led to a surge in exports of refined products like gasoline and heating oil, which are allowed by U.S. law. But most crude exports have been banned since shortly after the Arab oil embargo of the 1970s.

Before the domestic oil boom, many U.S. refiners invested billions of dollars so their plants could process heavy oil from Mexico, Venezuela and Saudi Arabia. Now domestic drillers are looking for ways to lessen their glut of light crude.

"Our belief is that the market for light sweet crude extends beyond the borders of the U.S., and as such, there is a need for lifting the ban," said the Continental spokeswoman, who would not reveal commercial terms of the swap application first reported by Dow Jones.

Senator Lisa Murkowski, the top Republican on the chamber's energy committee, last month issued a report saying swaps of light sweet crude to nearby countries like Mexico would be one way for the United States to start shrink the growing glut. Under such a swap, Mexico could refine light oil to make gasoline for its market, and would send heavy oil to U.S. refiners.

There is no major legislation on tap to reverse the crude oil export ban. But analysts expect Congress will take up the issue sometime after the Nov. 4 congressional elections.

(Reporting by Timothy Gardner, editing by Ros Krasny; Editing by Chizu Nomiyama)

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